Morning Commentary: High-grade primary market winds down; PacifiCorp bonds improve

By Cristal Cody

Tupelo, Miss., Dec. 23 – The investment-grade bond market is effectively shut for the rest of the year with little market activity reported on Monday, two days before the Christmas Day holiday.

The bond markets will close early at 2 p.m. ET on Tuesday and remain closed on Wednesday for the Christmas Day holiday.

Quite a few market participants already have left offices for the rest of the year with some desks thinly staffed, sources report.

No issuance is forecast this week, following zero bond deal volume last week, according to syndicate sources.

December high-grade corporate bond supply so far has totaled more than $20 billion.

The secondary market has been a bit busier but also is starting to slow. On Friday, just $11.26 billion of investment-grade issues were traded, compared to $19.08 billion of trading volume on Thursday, $20.64 billion on Wednesday, $20.44 billion on Tuesday and $18.87 billion on Dec. 16, according to Trace data.

PacifiCorp’s 4.15% first mortgage bonds due Feb. 15, 2050 (A1/A+) were among the most actively traded investment-grade bonds on Friday and continued to improve early Monday in the secondary market, a source said.

The bonds edged up to 115.99 over the morning from 115.91 on Friday.

PacifiCorp sold $600 million of the bonds on Feb. 25, 2019 at 99.535 to yield 4.177% and a Treasuries plus 115 basis points spread.

The electric utility and subsidiary of Berkshire Hathaway Energy Co. is based in Portland, Ore.

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